What the World Bank said about Zimbabwe attaining upper middle-income economy by 2030

An analysis by manufacturing subsectors indicates little growth in Zimbabwe’s GVC participation over the past decade in previously large export sectors, such as apparels,

footwear, and textiles. 

In fact, GVC participation across all sectors declined faster after the 2008 economic

crisis. For a country like Zimbabwe, transitioning into limited manufacturing requires substantive efforts in addressing the investment climate, establishing simple procedures for registering foreign investors, giving priority to improving trade related infrastructure and above all maintaining price and exchange rate stability.

Lowering tariffs on intermediate and capital goods, and tackling trade facilitation issues would help ensure that the country benefits significantly from the implementation of the AfCFTA. 

Despite being a signatory of several regional trade agreements, high tariffs and trade facilitation hurdles continue to constrain trade. More specifically, high tariffs on intermediate inputs and capital goods limit value addition and the diffusion of technology, while duty concessions distort economic incentives.

Furthermore, weak performance on trade facilitation and border management is a barrier to Zimbabwe becoming a significant regional exporter. 

Zimbabwe could become a regional transit hub, but this would require significant investment in border management operations and logistics infrastructure. 

There are opportunities for investments in transport and logistics infrastructure to support the development of regional economic linkages and value chains. 

Finally, the benefits of joining the AfCFTA are estimated to be significant for Zimbabwe, with intra-AfCFTA trade predicted to increase with the full implementation of the trade agreement.

Given Zimbabwe’s exports of processed foods, both the agriculture and manufacturing sectors stand to gain most in terms of exports to AfCFTA partners, supporting the development of intra-regional partners (World Bank, 2019c). 

There are two pathways (that also depend on macroeconomic stability) for boosting trade to scale up productivity:

• Support export diversification and participation in GVCs—such policies will involve developing linkages between downstream and upstream firms through supplier linkage programs and also incentives that allow research and development expenditures to be offset against taxes.
• Enhance participation in regional integration—these policies will involve implementing the tariff reductions required within the AfCFTA agreement. It also involves improving on trade facilitation measures such as fully automating all agencies that provide export licenses and permits, such as the Ministry of Lands, Agriculture and Rural Settlement, the Ministry of Industry and Commerce, and the Environmental Management Agency, and reduce the number of inspections, including by replacing paper-based documentation with electronic-based documentation. –World Bank report executive summary

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